Why Some Consulting Firms Grow, and Others Don’t…

Clarissa called yesterday. An Italian woman whose clipped, lilting English quickly revealed a sharp mind and passion for consulting.

Over the past five years Clarissa’s firm has grown from a handful of people to a bustling beehive of projects that is stretching 70 employees, and our discussion centered on how to continue their growth over the next five years.

Is your firm growing at 400% per year? Is rapid, profitable, sustainable growth your projection for the next five years?

Thad called yesterday, too. The leader of a three-person firm scattered across three East-Coast cities,

Thad went to my alma mater (Go Tartans!) and, like Clarissa, he’s a sharp cookie. His little firm has been struggling since its inception five years ago, though; rapid growth feels like a pipedream to Thad.

Is your firm stalled at the same level it was a year or two ago? Is there hope for growth?

Clarissa’s firm… Thad’s firm… WTF? I navigate this dichotomy every single day as I talk with consultancies of all sizes, and the contrasts are truly extraordinary. The question, of course, is why some firms burst out of the gates at the speed of sound and accelerate year after year, while other firms stumble and muddle along. Are there identifiable differences between Clarissa and Thad? Well, yes, actually.

As I’ve often said, consulting is a simple business. Only three parts to get right, all shown in the graphic below:

Clarissa’s company gets it right, Thad’s doesn’t. There, clear as mud, right? Let’s dig a little deeper. First, all three pieces of the puzzle must be working well for a firm to even function profitably. Two parts support growth and the third creates it.

Support #1: Creating Value. Outstanding delivery is critical because your reputation precedes you. At least it should. Some consulting gurus believe that if the quality of your work is high enough, your deliverables are the only marketing you need. Nonsense. Without strong talent, your prospects are limited, but creating value does not transform you from Bob’s Consulting and Auto Repair into McKinsey & Co. Clarissa’s firm prides itself on hiring Ph.Ds from top institutions, but Thad’s team is plenty bright enough to have built a solid name in their area of expertise.

Support #2: Infrastructure. Your ability to grow is harbored in Infrastructure elements such as the desire and intention of the consultancy’s owner(s), the ability to attract and retain people, consistent processes, nimble cash management and so forth. Clarissa’s firm successfully traversed the infrastructure hurdles between solo shop and 50-person firm. Thad’s team has struggled with adding partners, and strategic vision is woefully lacking. Interestingly, Clarissa’s group is also starting to face infrastructure challenges that will bring them to a screeching halt if not addressed.

Growth Food: Winning Engagements. The energy for growth is injected at the top of the puzzle: nailing more engagements from more clients at higher fees. What really separates the Clarissas of our industry from the Thads is their facility with the Power Cycle, shown below. If you want to inject CGH (consultant growth hormone) into your firm, you must ensure you are targeting the right people, solving problems they see as urgent, pervasive and expensive, and effectively communicating your ability to solve their problem.

If you are not hitting the numbers you think you should be, chances are you’re not doing well on any of the elements of the Power Cycle. Despite the fact that you think you have at least one or two of those working pretty well, I’m here to tell you that you don’t. Sorry. But you can. I’ve seen firms jigger all three parts of the Power Cycle into place and suddenly they take off. That can be you, too. Consulting’s an easy business.

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